Monday, February 14, 2011

Reduce Bet Types to Grow?

The former VP of General Mills, echoing and confirming a long-held truism in consumer marketing and sales, said that choice builds sales. If you only make cheddar cheese and sell it in five pound blocks, you can increase overall cheese sales by offering different colors, different flavors and different packaging and sizes, and grow. That's common sense really.

In racing this is also common sense. Chances are if you offered WPS and ex only, your handle will be less on the race than if you offer rolling doubles, quinella, tri and super wagering in addition to the base wagers.

But is the pari-mutuel business the same as the cheese business? I think in terms of the short term it is, but looking at the long-view, perhaps not.

Right now, especially in harness racing but at some smaller thoroughbred tracks too, there are myriad wagers offered, but little pool size to support all those bets. What ends up happening is that we have watered down pools. This is nothing new, but in the grand scheme of being a gambler, it means everything.

For example, let's look at multi-leg, or horizontal bets. In this form of betting pool size is everything in terms of fair-value. Here is the pick 3 explained.

"It would be great to have 3 consecutive 20-1 shots win in a Pick 3 on the WEG circuit, but unfortunately the pools usually only contain approximately $4000, leaving around $3000 after takeout. A $1 Win parlay of 3 20-1 shots would pay $9261, but hitting that pays you at most $3000, and less if someone else has also hit it. Making a Pick 3 wager with horses going off at 13.45-1 or more in each leg is a mathematically poor bet."

Clearly this happens at more places than just WEG. The question is simple: If not enough cash is bet in a pick 3 to make taking a stab at some longshots value, why do we offer them each race, and why would we offer rolling doubles, pick 6's and pick 4's as well as them to further water them down?

As mentioned, it's about money. A race with a pick 3, rolling double and a pick 4 will attract more money than a race with simply a pick 3 or double.

But what is more attractive to you as a player? What if Woodbine, for example, had a pick 3 from races 1 through 3 with no pick 3's in the second or third, and no daily double? The pool could be $25,000. I am sure over time this would grow, but possibly not grow enough to offset the DD and other pick 3 money (I am sure it won't).

What I think is more realistic is having a bet like a superfecta in one race, but do not allow any tri wagering. You can offer this bet at 15%, or maybe seed the pool or offer a big guarantee after awhile. What might happen over three months, or six months time, is that players from everywhere will come for a shot at the pool as it grows. You might get more money bet on it than you did when tri wagering and super wagering was combined. In effect, you have attacked the small pool bias we have in harness racing by shrinking choice, rather than expanding choice.

Pari-mutuel racing is based on pool size, and it appears at some tracks the easy way out might not be the best way out. I have often wondered here in Ontario where so many ovals have miniscule wagering (90%+ of purses are funded by the bandits and a handle of $50k on a whole card is considered a good day) why tracks do not try more things like this. Cut out some wagers, try and build pool size by cutting take or seeding pools in one bet. Perhaps within 12 months the large pool size on your one wager would be more than your current handle. Who knows.

North American racing is also losing a lot of potential handle through the lack of 'fractional betting'. In Australia if I want to put a 4 box trifecta (cost $24) and I only have $20 in my pocket, I can still have the bet but I get a percentage of the dividend, not the full dividend. North America's archaic tote system needs a drastic overhaul to let this type of betting occur as not only does it suit the casual/first time bettor who doesn't necessarily want to work out the permutations, but also the high end handicapper who wants to include marginal horses in races but bet to a limit.

The most important innovation in wagering in the past 10 years is Betfair's peer-to-peer exchange system. The vast bulk of the handle on that system is win wagering, with place (show in American parlance) betting a meaningful, though distant second.

In other words, given the right type of market, the most basic of wagers can be turbo-charged.

For about 10 years ago we could only bet the V75, pick5, one daily double and win and place on those races.

Is still only bet V75, daily double and an occasional quinella and win bet on saturdays. Has the overall handle grown? Of course it has but some of the pools have of course also diminished due to the additional types of bets that have been included.

When I was at a conference once a horse guy from Kiwi-land was asking all the bettors there where he could bet the hockey game and how he could get a fractional bet when he went to the track. He could not figure out why we don't have them in some form. Talk about a fish out of water :)

Tinky,

Harness racing one day (within 10 years) will eliminate the win pools and only have the exchange. That's my bet. The pools are too small at 95% of racetracks.

Janne,

Good to hear from you again, old friend. Thanks for that, as I have always wondered what you can bet on what races up there!